Deprivation of property and income is when a person or their spouse (partner) directly or indirectly disposes of assets and income.
Some people who intend to enter residential care may re-arrange their financial affairs to meet their changed lifestyle. Others re-arrange their affairs before they have anticipated that they would enter residential care.
There is no objection to a person making a re-arrangement of their financial affairs to their advantage but the issue is whether the re-arrangement is reasonable having regard to the legislative provisions that people pay or contribute to the cost of their long-term residential care based on their assets and income.
What are the rules for deprivation of property and income?
Deprivation generally occurs where a person (or their partner) gives away or sells financial resources (assets) for less than their value. Deprivation of income may include the gifting or selling of income bearing assets.
Deprivation may also have occurred when:
- the person (or their partner) re-arranges their financial circumstances, so as to reduce their income or assets after having received written advice of the income contribution they are required to make
- the person (or their partner) loans significant amounts of cash interest free
- gifts are made over the allowable gifting limit (eg, gifting outside the five-year gifting period) may be considered deprivation and depending on the circumstances, may be counted back in to the financial means assessment.
- changes have been made to the ownership of land or the home was registered as a joint tenancy
- a person has transferred or gifted a property to a trust or family member
- their financial resources have been structured and managed in a way that does not generate an income stream, for example, the conversion of income earning assets (such as dividend producing shares) to a non-income earning form such as Bonus Bonds, or where the transfer of income earning assets to a trust has the effect that the person receives less income.